INCOME FROM SARs TO BE TAXED: ITAT

Share Appreciation Rights (SARs), an innovative compensation package offered by many multinational companies to senior employees, will be taxed. The Income Tax Appellate Tribunal (ITAT), Mumbai, a quasi-judicial tax authority, has held that redemption of such rights is no longer tax-free since the ‘income’ generated is nothing but ‘deferred wages” and is taxable like any other earnings. This ruling on SARs, a variant of Employees’ Stock Option (ESOP), has reversed earlier orders given by several ITAT benches, when allowed such benefits to be tax-free.